Standard Deduction ₹75,000 vs ₹50,000 Tax Impact Tool (FY 2025–26)
Compare your tax liability under old and new standard deduction rules instantly.
Confused about how the increased standard deduction affects your tax liability? Our interactive calculator helps salaried taxpayers instantly compare their tax burden under the old standard deduction (₹50,000) and the new standard deduction (₹75,000) for FY 2025–26.
This tool computes taxable income, tax liability, and tax savings accurately under official income tax slab rules set by the Government of India. Whether you're trying to understand the financial impact of the standard deduction change or planning your tax strategy, this calculator provides instant, accurate results.
✓ Updated for FY 2025–26
In Budget 2025, the Government of India announced a major relief for salaried employees: the standard deduction has increased from ₹50,000 to ₹75,000 effective FY 2025–26 (April 1, 2025). This ₹25,000 increase can significantly reduce your taxable income and put more money back in your pocket. But how much will you actually save? Our standard deduction 75000 vs 50000 tax impact tool helps you find out instantly—without complex math or professional advice fees.
Quick Summary: What Changed?
The standard deduction for salaried taxpayers increased from ₹50,000 to ₹75,000 in FY 2025–26. This means if you earn a salary, you can now deduct ₹25,000 more from your gross income before calculating tax. For many middle-income earners, this creates a real opportunity: with the 75,000 standard deduction combined with Section 87A rebate, income up to ₹12.75 lakh can be effectively tax-free. Our standard deduction 75000 vs 50000 tax impact tool shows you exactly how much you save compared to the old ₹50,000 limit.
What is Standard Deduction? (And Who Gets It?)
Standard deduction is a fixed amount that reduces your taxable income automatically—no receipts, no proofs, no hassle. It's designed specifically for salaried employees and pensioners who receive regular income from employers or pension funds.
Who qualifies?
- ✓Salaried employees: Anyone earning salary from an employer
- ✓Pensioners: Those receiving pension from government or employer
- ✗Self-employed/Business owners: Cannot claim standard deduction
- ✗Freelancers/Contractors: Not eligible for this deduction
Standard Deduction: Old vs New
| Period | Standard Deduction | Applies To |
|---|---|---|
| FY 2024–25 and earlier | ₹50,000 | All salaried employees |
| FY 2025–26 (NEW) | ₹75,000 ⬆ | All salaried employees |
Key Point: This ₹75,000 deduction is automatic—you don't need to file receipts or claim it separately. Simply report your gross salary, and the tax authority automatically allows the standard deduction.
Why the ₹75,000 Standard Deduction Matters (FY 2025–26)
A ₹25,000 increase might sound modest, but in income tax, even small deductions compound into real savings. Here's why this matters:
1. Direct Tax Savings (For All Salaries)
The higher deduction reduces your taxable income. If you earn ₹10 lakh, with ₹75,000 standard deduction, your taxable income drops to ₹9,25,000. With ₹50,000, it would be ₹9,50,000. That ₹25,000 difference translates directly to tax savings.
2. Pushes You Into a Lower Tax Bracket
In India's progressive tax system, you pay more tax as income rises. A larger deduction can shift your taxable income into a lower slab, saving far more than ₹25,000. For example, if your salary crosses a slab boundary, the higher deduction can keep you below it—saving thousands in tax.
3. Creates a "Zero-Tax Zone" for Middle Earners
Here's the game-changer: Combine ₹75,000 standard deduction + Section 87A rebate (applicable to individuals earning up to ₹12,00,000 in new regime), and salaried employees can earn up to approximately ₹12.75 lakh effectively tax-free. This is a significant benefit that lets middle-income earners keep more of their salary.
💡 Bottom Line: Bigger Deduction = More Money in Your Pocket
The ₹75,000 deduction means your take-home pay after tax increases, you pay less tax to the government, and you have more financial flexibility for savings, investments, or expenses.
How the Standard Deduction Tax Impact Tool Works
Our standard deduction 75000 vs 50000 tax impact tool uses official FY 2025–26 income tax slabs and rebate rules to calculate your exact tax liability under both scenarios. Here's what happens behind the scenes:
Step 1: Collect Your Income Information
You enter:
- ✓ Annual gross salary
- ✓ Other taxable income (interest, rental income, etc., if any)
- ✓ For full mode: deductions under Section 80C, 80D, and other provisions
Step 2: Calculate Taxable Income
Taxable Income = Gross Income − Standard Deduction − Eligible Deductions
The tool computes two scenarios:
- Scenario A (₹50,000): Taxable Income = Gross − ₹50,000 (old limit)
- Scenario B (₹75,000): Taxable Income = Gross − ₹75,000 (new limit)
Step 3: Apply Official Tax Slabs
Once taxable income is known, the calculator applies FY 2025–26 new-regime tax slabs:
| Taxable Income | Tax Rate |
|---|---|
| ₹0 – ₹4,00,000 | 0% (No tax) |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| Above ₹12,00,000 | 15% – 30% |
Step 4: Add Health & Education Cess
A 4% cess is added on top of your calculated tax (mandatory for all taxpayers). Then, any applicable rebate (like Section 87A) is deducted.
Step 5: Show the Difference
The standard deduction 75000 vs 50000 tax impact tool displays:
- ✓ Tax with ₹50,000 deduction
- ✓ Tax with ₹75,000 deduction
- ✓ Tax Savings = Difference between the two
- ✓ Detailed slab-wise breakdown for transparency
Examples — See the Impact of the ₹75,000 Standard Deduction
Let's walk through three realistic salary scenarios to show how the increased standard deduction affects your tax liability. These examples use FY 2025–26 official tax slabs and Section 87A rebate.
Example 1: Mid-Level Earner (₹8,50,000 Salary)
Scenario: Neha, a software engineer, earns ₹8,50,000 per year. She has no other income and claims no deductions under 80C or 80D (keeps it simple in new regime).
With ₹50,000 Standard Deduction:
Gross Salary: ₹8,50,000
Standard Deduction: −₹50,000
Taxable Income: ₹8,00,000
Tax Calculation (New Regime): ₹0–₹4L (0%) + ₹4L–₹8L (5% on ₹4L) = ₹20,000
Health & Education Cess (4%): ₹20,000 × 4% = ₹800
Total Tax Payable: ₹20,800
With ₹75,000 Standard Deduction (NEW):
Gross Salary: ₹8,50,000
Standard Deduction: −₹75,000
Taxable Income: ₹7,75,000
Tax Calculation: ₹0–₹4L (0%) + ₹4L–₹7.75L (5% on ₹3.75L) = ₹18,750
Health & Education Cess (4%): ₹18,750 × 4% = ₹750
Total Tax Payable: ₹19,500
✓ Tax Savings: ₹20,800 − ₹19,500 = ₹1,300 per year
That's ₹108 extra in her pocket every month! Over a career, this standard deduction 75000 vs 50000 difference saves significant money.
Example 2: Lower Mid-Income Earner (₹5,50,000 Salary) — Zero-Tax Benefit
Scenario: Rajesh earns ₹5,50,000 annually as an operations manager. He has minimal other income and uses the new regime with the ₹75,000 standard deduction.
With ₹50,000 Standard Deduction:
Gross Salary: ₹5,50,000
Standard Deduction: −₹50,000
Taxable Income: ₹5,00,000
Tax (0% on ₹4L + 5% on ₹1L): ₹5,000
Cess (4%): ₹200
Total Tax: ₹5,200
With ₹75,000 Standard Deduction (NEW):
Gross Salary: ₹5,50,000
Standard Deduction: −₹75,000
Taxable Income: ₹4,75,000
Tax (0% on ₹4L + 5% on ₹75,000): ₹3,750
Cess (4%): ₹150
Total Tax: ₹3,900
✓ Tax Savings: ₹5,200 − ₹3,900 = ₹1,300 per year
Notice: With the ₹75,000 deduction, Rajesh stays well below the ₹12,00,000 Section 87A rebate threshold, keeping his tax minimal. This is exactly what the standard deduction 75000 vs 50000 tax impact tool is designed to reveal.
Example 3: High Earner (₹25,00,000 Salary) — Minimal Standard Deduction Impact
Scenario: Priya is a senior manager earning ₹25,00,000 per year. The standard deduction change has less impact at this level because she's already well above the lower tax slabs.
With ₹50,000 Standard Deduction:
Gross Salary: ₹25,00,000
Standard Deduction: −₹50,000
Taxable Income: ₹24,50,000
Tax (0% + 5% + 10% + 15% + 20% + 25% slab portions): ₹5,59,500
Cess (4%): ₹22,380
Total Tax: ₹5,81,880
With ₹75,000 Standard Deduction (NEW):
Gross Salary: ₹25,00,000
Standard Deduction: −₹75,000
Taxable Income: ₹24,25,000
Tax (same slab rates on lower amount): ₹5,54,500
Cess (4%): ₹22,180
Total Tax: ₹5,76,680
✓ Tax Savings: ₹5,81,880 − ₹5,76,680 = ₹5,200 per year
While ₹5,200 is still meaningful, the ₹25,000 additional deduction saves proportionally less at higher incomes because the extra amount is taxed at a higher slab rate (25%). This shows that the standard deduction 75000 vs 50000 benefit is greatest for middle-income earners.
📊 Key Insight from Examples:
The standard deduction 75000 vs 50000 tax impact tool reveals that:
- • Middle earners (₹5–15 lakh) see the highest benefit: ₹1,000–₹3,000+ per year
- • Even high earners benefit, but the percentage saving is lower
- • Every salary level benefits—use the calculator to find your exact saving
Old Regime vs New Regime — Practical Advice for Your Tax Strategy
The increased ₹75,000 standard deduction is a new-regime benefit. But should you use the new regime, or stick with old regime deductions? Here's how to decide:
New Regime (₹75,000 Deduction)
When to choose:
- ✓ You have fewer deductions under 80C, 80D, etc.
- ✓ Your salary is ₹5–15 lakh (sweet spot for this deduction)
- ✓ You value simplicity over maximizing deductions
- ✓ You don't have home loan interest or major investments
Benefit: Simple calculation, automatic ₹75,000 deduction (no docs needed), lower tax rates on higher income slabs.
Old Regime (₹50,000 + Deductions)
When to choose:
- ✓ You have substantial deductions: 80C (₹150K), 80D, home loan interest, donations
- ✓ Combined deductions exceed ₹75,000
- ✓ You can produce proof (bills, certificates) for deductions
- ✓ Your taxable income is high enough that lower slab rates matter
Benefit: Deductions can exceed standard deduction, significantly lowering taxable income.
Quick Decision Checklist
| Your Situation | New Regime (₹75k) | Old Regime |
|---|---|---|
| No deductions (simple salary) | ✓ Better | ✗ |
| Deductions ₹30k – ₹75k (80C, etc.) | ✓ Better | ≈ Similar |
| Deductions > ₹75k (80C + 80D + HLI) | ≈ Similar | ✓ Better |
| High home loan interest (>₹2L) | ✗ | ✓ Better |
Tip: Use the calculator's "Full Regime Comparison" mode to compare old regime (with your actual deductions) vs new regime. This instantly shows which is better for your specific situation.
Common Mistakes to Avoid (And How the Calculator Prevents Them)
❌ Mistake 1: Confusing Gross Salary with Taxable Income
The Error: Many people think "If my salary is ₹6 lakh, and I pay 5% tax, that's ₹30,000." This ignores the standard deduction!
The Correct Calculation: Gross ₹6 lakh − ₹75,000 standard deduction = Taxable ₹5,25,000. Then 5% applies to only the amount above ₹4 lakh, which is ₹1,25,000. Tax = ₹6,250 + cess.
✓ How the calculator helps: It clearly separates gross income, standard deduction, and taxable income, preventing this confusion.
❌ Mistake 2: Forgetting Health & Education Cess
The Error: Calculating tax using only the slab rate (0%, 5%, 10%) and forgetting the 4% cess adds an extra layer of tax.
The Correct Approach: Always add 4% cess on top of the calculated tax. Example: If tax = ₹20,000, cess = ₹800, so total = ₹20,800.
✓ How the calculator helps: It automatically includes cess, showing the true final tax amount.
❌ Mistake 3: Not Including Section 87A Rebate
The Error: In new regime, salaried individuals earning up to ₹12 lakh get a full rebate on tax (if they file ITR). Forgetting this means overestimating your tax.
The Correct Approach: If your taxable income ≤ ₹12 lakh in new regime, your tax reduces to zero (subject to rebate conditions).
✓ How the calculator helps: It applies Section 87A rebate automatically, giving your true tax liability.
❌ Mistake 4: Ignoring Other Taxable Income
The Error: Some people only report their salary and forget interest income, rental income, or freelance earnings. This understates their taxable income.
The Correct Approach: Add all taxable income sources before applying the standard deduction.
✓ How the calculator helps: It has a separate field for "other taxable income," ensuring you don't miss any sources.
❌ Mistake 5: Mixing Regime Rules (Can't Use Both)
The Error: Trying to claim ₹75,000 standard deduction and ₹150,000 under Section 80C. You must choose one regime—you can't mix.
The Correct Approach: In new regime: Only standard deduction (no 80C, 80D, etc.). In old regime: Standard deduction + eligible deductions, but no new-regime benefits.
✓ How the calculator helps: The "Full Regime Comparison" mode clearly shows old vs new, preventing this mistake.
Frequently Asked Questions About the Standard Deduction 75,000 vs 50,000 Tax Impact
1. When does the ₹75,000 standard deduction apply?
The ₹75,000 standard deduction applies to FY 2025–26 onwards (assessment year 2026–27). If you file your tax return in 2025 for FY 2024–25, you still use ₹50,000. But from financial year starting April 1, 2025, use ₹75,000.
2. Can I claim ₹75,000 standard deduction in the old tax regime?
No. The ₹75,000 standard deduction is a new-regime benefit only. In the old regime, you get ₹50,000 standard deduction, but you can add deductions like 80C, 80D, home loan interest, etc.
3. My salary is below ₹4 lakh. Do I need to file a tax return?
Even if your taxable income is nil, you may want to file a return for benefits like ITR C (loss carry-forward) or to claim refunds. Check current filing thresholds. The calculator helps you determine your tax liability accurately.
4. If my deductions exceed ₹75,000, should I switch to old regime?
Not always. Use the standard deduction 75000 vs 50000 tax impact tool's Full Regime Comparison to check both. Even in old regime with high deductions, new-regime lower tax rates might benefit you at higher incomes. Compare both scenarios.
5. Does the standard deduction apply to bonus and allowances?
Yes. The ₹75,000 standard deduction applies to your entire salary (basic + allowances + bonus + commission). It's calculated on total salary income, not specific components.
6. Is this calculator's result final, or should I consult a professional?
The calculator provides an estimate based on official FY 2025–26 slabs. For final tax planning, especially if you have complex income sources, multiple deductions, or investments, consult a qualified Chartered Accountant (CA) or tax professional. This tool is educational.
Final Summary: Don't Leave Money on the Table
The increase from ₹50,000 to ₹75,000 standard deduction in FY 2025–26 is real financial relief for salaried taxpayers. Whether you save ₹1,000 or ₹5,000+ depends on your income, deductions, and regime choice. But one thing's certain: not using the new ₹75,000 deduction means paying more tax than necessary.
Use our standard deduction 75000 vs 50000 tax impact tool right now to calculate your exact tax savings for FY 2025–26. It takes 60 seconds, requires no paperwork, and gives you clarity on your tax liability. Then, armed with this knowledge, make informed decisions about your finances.
👇 Calculate your tax savings now with the Standard deduction 75000 vs 50000 tax impact tool 👇
Official Reference & Disclaimer
✓ Information Verified Against Official Sources:
This article uses official income tax slab rules and standard deduction amounts from:
- • Income-Tax Department Official Website: incometaxindia.gov.in
- • Union Budget 2025 Press Release and Finance Ministry Announcements
- • CBDT (Central Board of Direct Taxes) Guidelines on Standard Deduction (FY 2025–26)
⚠ Important Disclaimer:
This calculator and article provide estimated tax calculations based on official FY 2025–26 income tax slabs and standard deduction rules. It is not professional tax advice and does not constitute legal or financial advice.
- • Results are estimates only. Actual tax liability may differ based on state-specific taxes, surcharges, rebates, or special circumstances.
- • Do not rely solely on this calculator for tax filing or financial planning.
- • Always consult a qualified Chartered Accountant, tax professional, or the Income Tax Department for accurate, personalized guidance.
- • We are not liable for any errors, omissions, or decisions made based on calculator results.
Accuracy, Expert Review & Official Sources
Built on official Indian tax regulations and verified by certified professionals
Last Updated: 9 February 2026
Specialized in financial tools, tax regulations, and calculator precision
Calculations verified against official Indian tax guidelines and regulations
This Standard Deduction Tax Impact Calculator is built on official Indian tax regulations and government guidelines:
Official source for Indian income tax acts, rules, notifications, and guidance
Official rules on ₹75,000 standard deduction for salaried employees
This calculator is for informational and educational purposes only. This calculator shows tax impact of standard deduction changes. Actual tax depends on your income, regime choice, and deductions. Always verify with your employer's payroll system.
Key Limitations:
- • Does not constitute professional tax or legal advice
- • Individual tax situations are unique and may require adjustments
- • Changes in tax laws may affect accuracy of results
- • Additional deductions, exemptions, or taxes may apply
- • State-specific taxes and other regulations are not included
Always consult a qualified Chartered Accountant or tax professional before making tax-related decisions.
All calculations are performed locally in your browser. No data is sent to servers or stored. Your financial information remains completely private.
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Toolisky is an independent platform created to help users with tax calculations and educational insights. For official filing or legal decisions, users should consult a certified tax professional.
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